Which Is Better: A Layaway Plan Or A Credit Card Purchase?

Without even thinking about it, getting a layaway plan as a single parent at a department store for that very expensive quilt you’ve always wanted is a far better choice than using a credit card. Consumers are so used to paying for things with a credit card, that they don’t realize the amounts they are racking up with small purchases which should ordinarily be paid for in cash.

If you buy a loaf of bread and a carton of milk with a credit card that is stupid and self-defeating as you end up with a bank charge as well. With the advent of the credit card people who used to take out a layaway plan stopped doing so and a little of the shopping magic went away. With a layaway plan you could purchase a trampoline for your children six months before the Christmas. When you finally collect it, it is all yours, and you owe no money on it. Layaway plans were taken out for many products and items.

In South Africa, for instance, a poor or not so poor family would invest in a hamper layaway which they would start paying for in January, and receive twelve months later just before Christmas. It was called the Christmas hamper, and was a basket filled with the best cheese, coffee, candy, chocolates, crackers, and so on. The little that they paid every month assured them this bountiful gift at the end of the year, and there were no further payments to make.

With the arrival of the credit card the layaway plan quietly took a back seat and the magic was lost. People wanted to whip out a card and have instant gratification. They would tire of the product or the item long before it was paid for. They would rack up more and more debt until finally there was no available credit left on the card and they had nothing to show for it. The good news is that as the economic slowdown continued, online retailers realized the value and benefits that they could gain by allowing customers to make a purchase under a layaway plan. As well, purchasers made more sensible purchases with their credit cards and seldom got themselves into financial trouble. There isn’t a young man or a young woman landing their first job and earning some money who didn’t spend all their money on clothes.

A layaway plan for single parents allows you to:

Make a purchase in January for something you need in June or December, by making monthly payments and receiving your product at the end of the year, with no further payments to make.

Shop sensibly, enjoy the shopping experience, and look forward to a gift you have bought for yourself months before.

Buy an expensive item or something you can’t readily afford with six or twelve small monthly payments.

Save money in a savings account as you have more disposable income buying special products on a layaway plan.

There is no doubt that the old-fashioned layaway plan is the best way to go. Not only is the practice embraced by brick and mortar retailers, online merchants are getting into the act and everything from laptops to boat cruises are now only a mouse click away. It certainly makes sense for someone who doesn’t want to pay unnecessary charges and who have the patience to wait for their hampers, gifts, or whatever products they have bought. When the economy plummeted, retailers saw their customer-base dwindling as cardholders cancelled their cards. By offering online layaway for retailers such as Best Buy and Jo-Ann Fabric and Craft Stores, consumers were able to buy merchandise without running up their credit card debt further, while at the same time practicing budgeting for the things they most desired. A layaway plan is a great budgeting tool and a simple way to avoid debt especially as a single mother.

How A Layaway Plan Work

Robert Holland launched Lay-Away.com in 2002 and said he realized that regardless of the economy, there will always be consumers who are a little savings-challenged. While it might be hard for a consumer to save up $500 for a new TV, paying $25 a week for that TV is not a big deal. That is precisely the beauty and practicality of having a layaway plan. For a single mother, especially, it is a great way to feed and clothe her children as she can use cash for food items, and have a layaway plan for items which can wait.

How an online layaway plan for single parents works

Lay-Away.com and eLayaway.com are similar in that customers select what they want to purchase, and check it out with an online retailer such as Amazon.com. Instead of charging the item to a credit card, however, shoppers decide how many payments to make, and at what amount. eLayaway debits customers’ bank accounts, while Lay-Away.com also allows payment by check or money order. Once the item is paid for in full, it is shipped within a few days.

Lay-Away.com receives a commission from retailers and consumers don’t pay service fees, while eLayaway.com charges consumers a fee of 1.9 percent to 3 percent on each transaction, which is far lower than typical credit card interest rates.

Because the lay-away system had been used with much success in the past by the baby boomers, they had no problem picking it up again. Unfortunately, there are some people who look as the layaway plan as a vehicle for poor people instead of seeing it as a budgeting tool and learning financial responsibility.

Layaway plans are once again popular, and retailers such as Sears and Kmart have revived their layaway for some products. Other retailers such as Toys R Us and Burlington Coat Factory, also offer layaway services in their stores. Cruises and vacation packages can all be paid for with a layaway plan for single parents.

You can do comparison shopping and see if an online layaway company will match prices if a retailer discounts items over the course of the layaway period.

A layaway plan is not for everyone, however, and some people would only recommend a layaway plan if there was no other option. Yet, there are others also who would prefer to put that money in a savings account, perhaps fearing that the online retailer would be out of business by the time the final payment was made and the gift collected. Bill Moak, President of the Better Business Bureau Mississippi says that consumers need to do due diligence about a company before agreeing to purchase a product through online layaway just as they would with any retailer. It makes sense that one should read the fine print of the purchase agreement and check for refund and cancellation options. Barbara Stark of American Debt Counseling Inc. states that it is not just for people who can’t afford to make a purchase it’s for people who really want to manage their money.

Stigmas that layaway plans have to contend with

They are old-fashioned plans that your Grade 1 teacher used and not suitable for those who want to leave the shop with their purchases.

Layaway plans are for those who cannot afford the items they are purchasing. They see it as a negative rather than as a budgeting tool which allows you to spend responsibly.

Layaway plans are not a good fit for the ‘must have it right now culture’.

They would rather put the money in a savings account. Of course this seldom happens as whatever is on the card gets spent until there is no credit limit left. A layaway plan for single mothers protects the consumer from himself.

Online layaway sites

The Kmart Online Layaway Program gives shoppers the option to put selected items in their online catalog on layaway. You make the purchase online, but have to pick up the item yourself in the store once the payments are completed. Payments can be made over an eight week period. Note that the item must be in a local store in order to be put on layaway online. You pay $15 or 10% down, whichever is greater, and a $5 initiation fee.

The Sears Online Layaway Program for single parents works the same way except that you make a small deposit of $15 or 20% at the time of purchase. A $5 initiation fee is required and a $10 fee for cancelled orders. The item also has to be in a local store where you can pick it up.

Burlington Coat Factory Layaway policy is where you pay a 20% deposit and a $5 service fee to initiate a 60 day layaway. The second 20% payment must be made within fourteen days. Cancelled orders will result in a $5 fee. Any refunds resulting from the cancellation or return of layaway merchandise will be placed on a store gift card. No cash refunds will be made.

At Hallmark you pay 20% down. Other terms may vary by store location.

At Marshall’s you pay 10% down and a $5 service fee. Merchandise must be paid up and picked up within 30 days. It is not offered in all stores. You can use the store locator on their website to locate participating stores.

Toys R Us have large ticket items like bikes, dollhouses, play kitchens, car seats and strollers, which may be placed on a layaway plan for single parents. You must have a 20% deposit, pay all applicable taxes and pay a $10 service charge at the time the item is placed on layaway. Items must be paid for by Dec 6 to be available for pickup before Christmas. If an order is cancelled, it will result in a $5 fee.

There are many shops that offer online shopping, including antique stores, cruise lines, and so forth. If you only do online shopping, check out eLayaway.com. It allows you to set up a layaway plan with over 1000 stores.

Book a cruise on a layaway

Have you ever heard of a layaway plan for a vacation? At Personal Travel you can take advantage of special travel rates by booking your cruise at the right time of the year. Yes, there is a right and a wrong time to travel if going on a vacation. At peak times, rates for airfare and hotel accommodation are higher. For as little as $150, you can book with Personal Travel and plan the vacation of a lifetime.

Paying off your vacation, you can take advantage of early booking specials, upgrades and introductory rates by booking in advance. Layaway plan for single moms or not, you have to book for cruises ahead of time in any event. With Personal Travel you can book up to eighteen months in advance They make your reservation and you make your payments over a stipulated period of time. You can also elect to make a single balloon payment at the end of the layaway period, with no interest or fees. While you pay off your booking, you can visualize yourself lying on a boat in the hot sun. You have something to look forward to.

How Personal Travel Vacation Layaway works

Contact one of their agents to begin planning your vacation. Take note that Vacation Layaway is not available through their on-line booking engines and you will have to go to their place of business.

You will get a brochure with deposit and balance information depending on the type of vacation you choose.

You pay the minimum deposit due within 24 hours of making your reservation to hold your vacation space, travel dates and lock in the lowest rate. This is important when you consider how much you can save.

You have the option to pay as little or as much as you want until your layaway period ends which is usually 6 weeks prior to your departure date. Of course, the more you pay upfront the better it is as your monthly payments will be less.

Online layaway instead of credit card purchases work if you really work it.